We Remain Positive on TUNEPRO, Premised on the Group’s Continued Focus on Rationalisation of Business Composition (to More Profitable Non-motor Segments) as Well as Harness New Digital Partnerships & Improve Sustainability of Existing Portfolios. Also, TUNEPRO Could be One of the Beneficiaries From Visit Malaysia Year (VMY) 2020 Campaign as the Government Targets to Bring in 30m International Tourist Arrivals, While It Is An Alternative Proxy to Participate in AirAsia’s Strong Growth Story Without Exposures to Jet Fuel Price and USD Borrowings Risks. Valuations Are Undemanding at 8x FY20 P/E (45% Below Peers and 28.6% Below 2Y Historical Average of 11.2x) and 0.79x P/B (69% Lower Than Its Peers and 28.2% Below 2Y Historical Average of 1.1x), Supported by a Stable 7% FY18-21 EPS CAGR, Attractive FY20 Dividend Yield of 5.6% (54% Higher Than Its Peers). Overall, the Stock Is Ripe for a LT Downtrend Reversal and Heading Towards RM0.60-0.71 Levels After Forming a Saucer Bottom Pattern.

Potential LT downtrend line breakout. After sliding 79% from RM2.57 (2 June 2014 high) to all-time low at RM0.525 (20 Dec 2018), TUNEPRO staged a 46% relief rally to a high of RM0.765 (July 2019). However, profit taking pullback saw prices plunged to a low of RM0.54 in 9 sessions, forming a rounding bottom pattern before closing at RM0.575 yesterday (still comfortably above the RM0.525 LT support). Following the cessation of substantial shareholders of Kumpulan Wang Persaraan (18 Nov 2019) and River & Mercantile Asset (23 Dec 2019) that triggered bulk of the selling pressures since 2017, TUNEPRO is likely to stage a reclaim above LT downtrend line (at RM0.58) soon, as technicals are on the mend. A successful breakout will spur prices higher to retest RM0.615 (30W SMA) and RM0.64 (200D SMA) before embarking towards our LT target at RM0.71 (76.4% FR). Supports are pegged at RM0.525-0.54. Cut loss at RM0.515.

Source: Hong Leong Investment Bank Research - 8 Jan 2020